TY - JOUR
AU - Dettling,Lisa J.
AU - Kearney,Melissa Schettini
TI - House Prices and Birth Rates: The Impact of the Real Estate Market on the Decision to Have a Baby
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17485
PY - 2011
Y2 - October 2011
DO - 10.3386/w17485
UR - http://www.nber.org/papers/w17485
L1 - http://www.nber.org/papers/w17485.pdf
N1 - Author contact info:
Lisa J. Dettling
Federal Reserve Board
Washington, DC 20551
E-Mail: Lisa.J.Dettling@frb.gov
Melissa Schettini Kearney
Department of Economics
University of Maryland
3105 Tydings Hall
College Park, MD 20742
Tel: 301/405-6202
E-Mail: kearney@econ.umd.edu
M2 - featured in NBER digest on 2012-02-01
AB - This project investigates how changes in Metropolitan Statistical Area (MSA)- level housing prices affect household fertility decisions. Recognizing that housing is a major cost associated with child rearing, and assuming that children are normal goods, we hypothesize that an increase in house prices will have a negative price effect on current period fertility. This applies to both potential first-time homeowners and current homeowners who might upgrade to a bigger house with the addition of a child. On the other hand, for current homeowners, an increase in MSA-level house prices will increase home equity, leading to a positive effect on birth rates. Our results suggest that indeed, short-term increases in house prices lead to a decline in births among non-owners and a net increase among owners. The estimates imply that a $10,000 increase leads to a 5 percent increase in fertility rates among owners and a 2.4 percent decrease among non-owners. At the mean U.S. home ownership rate, these estimates imply that the net effect of a $10,000 increase in house prices is a 0.8 percent increase in current period fertility rates. Given underlying differences in home ownership rates, the predicted net effect of house price changes varies across demographic groups. In addition, we find that changes in house prices exert a larger effect on current period birth rates than do changes in unemployment rates. This project investigates how changes in Metropolitan Statistical Area (MSA)- level housing prices affect household fertility decisions. Recognizing that housing is a major cost associated with child rearing, and assuming that children are normal goods, we hypothesize that an increase in house prices will have a negative price effect on current period fertility. This applies to both potential first-time homeowners and current homeowners who might upgrade to a bigger house with the addition of a child. On the other hand, for current homeowners, an increase in MSA-level house prices will increase home equity, leading to a positive effect on birth rates. Our results suggest that indeed, short-term increases in house prices lead to a decline in births among non-owners and a net increase among owners. The estimates imply that a $10,000 increase leads to a 5 percent increase in fertility rates among owners and a 2.4 percent decrease among non-owners. At the mean U.S. home ownership rate, these estimates imply that the net effect of a $10,000 increase in house prices is a 0.8 percent increase in current period fertility rates. Given underlying differences in home ownership rates, the predicted net effect of house price changes varies across demographic groups. In addition, we find that changes in house prices exert a larger effect on current period birth rates than do changes in unemployment rates.
ER -